Building the rails for the next generation of digital money: Interview with Avtar Sehra, CEO and Co-founder of STBL

By Vriti Gothi

Stablecoin innovation is entering a new phase as regulatory fragmentation and institutional requirements shift the focus from token issuance to resilient settlement infrastructure. In this conversation, Vriti Gothi speaks with Avtar Sehra, CEO and Co-founder of STBL  about the need for a unified reserve layer, transparent on-chain collateral, and the structural separation of stability, yield, and risk. The discussion explores how purpose-built, interoperable stablecoins can help banks, FinTechs, and digital ecosystems issue compliant assets without fragmenting liquidity laying the foundation for efficient cross-border settlement and institution-grade digital finance.

With stablecoin regulation diverging across Asia and Europe, how do you see this fragmentation impacting cross-border liquidity and settlement efficiency, and why does it strengthen the case for a universal reserve layer?

The differing regulatory approaches in Asia and Europe are creating an increasingly siloed stablecoin landscape. In Europe, the EU’s Markets in Crypto Assets Regulation imposes rules on reserve composition, redemption rights, and issuance thresholds. In contrast, Asia’s frameworks—such as Singapore’s MAS stablecoin regime and Hong Kong’s proposed HKMA licensing framework—apply different standards for reserve backing, disclosures, and operational requirements. These variations force liquidity to settle within domestic systems rather than move freely across borders. Institutions must reconcile incompatible operating models, introducing friction into cross-border settlement and limiting the efficiency that stablecoins were designed to deliver.

Moreover, most large-scale stablecoins still rely on centralised issuers who capture yield while users provide the capital. This concentrates liquidity in a few hands, weakening system-wide neutrality and trust, and further compounding the fragmentation.

This is precisely why a universal reserve layer is needed. Anchoring stablecoins to a transparent, on-chain collateral base allows institutions to issue their own compliant, jurisdiction-aligned assets without disrupting liquidity. Local policy autonomy is preserved each issuer can implement its regulatory and operational requirements — while maintaining a unified settlement foundation across markets. Institutions gain control over supply, incentives, and compliance in their own jurisdictions, yet operate on a single, interoperable reserve that ensures predictable, efficient cross-border settlement.

You’ve suggested that the competitive frontier is shifting from token issuance to settlement infrastructure. What does this mean in practical terms for FinTech firms, banks, and institutions building in digital assets?

The industry has moved beyond a phase where token issuance alone is a differentiator. Today, the frontier is settlement infrastructure how reliably value moves and how consistently systems behave under institutional standards.

For FinTechs, this means building rails that deliver real-time auditability, predictable liquidity, and automated risk boundaries. For global banks, the demands are even higher: settlement infrastructure must align with regulated balance-sheet expectations, including mechanisms that separate payments from yield so tokens remain neutral and spendable. Institutions also prioritise control and configurability, enabling them to own their monetary rails, define policy parameters, and operate within jurisdiction-specific regulatory frameworks without fragmenting liquidity.

As these requirements converge, the bar for settlement infrastructure has risen. Institutions now expect secure custody frameworks, deterministic redemption logic, transparent on-chain collateral, and governance structures capable of withstanding regulatory audits. This is why ecosystem

players are increasingly gravitating toward infrastructure providers, like us, who offer regulatory coherence, real-time collateral verification, and seamless interoperability across ecosystems.

STBL separates stability, yield, and risk through its dual-token architecture (USST and YLD). From a financial engineering and regulatory standpoint, why is this structural separation important?

We addressed the “original sin” of first-generation stablecoins. From an engineering and regulatory perspective, a single token cannot serve two principles: it cannot be a neutral, risk-free medium of exchange and a yield-bearing security at the same time. Attempting to combine them introduces structural conflicts that regulators and risk managers will no longer tolerate.

Our philosophy is radical clarity. USST is the money; YLD is the reward. By decoupling the principal from the yield, USST operates as a pure, fully collateralised payment instrument, while YLD isolates the return. This isn’t just a feature; it is a requirement for the future of compliant money. It ensures that stability logic is never corrupted by yield optimisation. We have engineered trust by separating it from greed.

As ecosystem-specific stablecoins (ESS) gain traction, do you see purpose-built digital money becoming the dominant model over general-purpose stablecoins—and what will determine which architectures scale globally?

This isn’t just a trend; it’s inevitable. The era of “one-size-fits-all” stablecoins is ending. General-purpose stablecoins like USDC or USDT serve global liquidity needs, but they cannot provide the policy control, programmability, or regulatory alignment that banks, FinTechs, and large ecosystems now require. These institutions need the ability to define monetary parameters, design incentives, and integrate compliance directly into their currency systems capabilities that only ESS can deliver.

The architectures that scale globally will be those built on transparent, interoperable, and economically robust foundations, including:

● A shared reserve layer that prevents liquidity fragmentation across ecosystems;

● Verifiable on-chain collateral that institutions can continuously audit; and

● A design separating stability, yield, and risk at the infrastructure layer.

This is the core of STBL’s approach. By anchoring ESS to a unified reserve, ecosystems can issue their own currencies without fragmenting liquidity or sacrificing interoperability. The architectures that succeed will maximise auditability, predictable settlement, user-owned yield, and clear risk boundaries. In short, purpose-built digital money empowers platforms, banks, and corporations to move from renting capital to owning their own economies — the foundation for the decentralised age.